Hi Lisa
It is okay to receive a VAT only invoice upfront, many suppliers selling expensive equipment will provide the client with loan agreements, some will include the VAT element some won't, it will depend on how the supplier is paying his share of the VAT and when. If you have received a VAT only invoice it will allow you to reclaim the input VAT element on your next VAT return. (Usually the supplier wants the VAT upfront because he has to pay it) The old Bookkeeper has incorrectly posted the invoice, you will need to cancel her invoice (credit it exactly as she posted it, same dates etc) and re-post it as stated in the invoice i.e Net = Nil, VAT = £370k and total £370k.
Obviously once you have credited the invoice you will no longer have the asset showing, therefore you will need to do Journal Entry
Set up a Loan Agreement Account with Supplier's Name in the Balance Sheet
Debit Your Asset Account £1.8m Credit a Loan Agreement Account £1.8m
When you post the rest of the invoices (as stated on invoice with no vat), code them to the Loan Agreement A/c, this will reduce the amount owed to supplier and keep your ledgers correct
Hope this helps Sue
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